Human Resources

CUs Grapple with Rising Benefit Costs

Is CUs’ ‘employee-friendly’ image being eroded by smaller, pricier benefit packages?

January 14, 2013
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The self-insured option

Credit unions must consider the potential impact on employee attraction and retention when they make benefit decisions, even in a soft economy when unemployment is high.

“The cost of turnover will far exceed any savings you have by shifting costs to employees. You’re going to pay for it,” says Lisa Pesta, vice president of HR at the $1.1 billion asset Meriwest Credit Union in San Jose, Calif. “We’re in Silicon Valley. When I look at our competitors, I don’t look at other financial institutions. There are sexier opportunities in Silicon Valley. I have to create a culture where employees want to stay.”

But double-digit increases in health insurance premiums are making it difficult for credit unions to hold the line on employees’ cost of health insurance.

Meriwest managed to keep employees’ 15% share of premiums steady despite increasing costs. But when the base premium rose, so did the employee contribution. The credit union also raised co-pays from $15 to $20 a few years ago.

Reluctant to shift more cost and unable to achieve great savings through negotiations, Pesta enrolled Meriwest in the Credit Union Health Benefits of America (CUHB) plan offered by the insurance broker Risk Strategies Company. CUHB is a partial self-insurance plan targeting credit unions.

Under the plan, Meriwest covers its own small claims. It pools resources with other credit unions for large claim coverage, and the plan caps maximum annual liabilities.

A third-party provider handles the credit union’s claims, and Pesta says the CUHB plan looks like a traditional health plan to employees. The benefit, though, is that Pesta could reduce health insurance costs by 6.4%.

Patelco Credit Union joined the modified self-insurance program in 2009 for the same reason.

“The rate increases were going to be so high that if we didn’t do anything, we were going to revamp our group medical plan or substantially increase the employee contribution. We didn’t want to do either,” explains Ed Cassady, vice president of HR at the $3.6 billion asset credit union in Pleasanton, Calif.

The credit union has saved approximately 15% annually, but Cassady adds there are other benefits to CUHB. For reinsurance purposes, each credit union stands alone.

For example, that means a bad claims year in 2012 at Patelco won’t affect Meriwest’s required contribution in 2013.

Cassady also adds that the self-funded plan allows Patelco to access health usage data, which enables the credit union to tailor wellness programs and services to the needs of its employees.

Cassady expects this targeted investment to yield even further savings as its wellness efforts mature.

People might think there’s quite a bit of risk involved in a self-insured option, Cassady says, but there really isn’t. If you want to explore all avenues, attempt to control expenses, and produce a good package, learn about partial self-insurance, he recommends.

Many credit unions might have previously been unwilling to assume the risk involved with any full or partial self-insurance plan, Soltis adds. But she expects more credit unions to explore it and other out-of-box alternatives in an effort to maintain high-quality benefits.

“It’s so important for recruitment and retention,” she says, “and more employers are recognizing the health of their employees is important to their productivity and directly tied to the workplace culture.

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Great article! Unfortunately, most employees don’t feel valued or appreciated by their supervisors or employers. In fact, research has shown that the predominant reason team members quit their jobs is because they don’t feel valued. This is in spite of the fact that employee recognition programs have proliferated in the workplace – over 90% of all organizations in the U.S. has some form of employee recognition activities in place. But most employee recognition programs are viewed with skepticism and cynicism – because they aren’t viewed as being genuine in their communication of appreciation. Getting the “employee of the month” award, receiving a certificate of recognition, or a “Way to go, team!” email just don’t get the job done. How do you communicate authentic appreciation? We have found people have different ways that they want to be shown appreciation, and if you don’t communicate in the language of appreciation important to them, you essentially “miss the mark”. Additionally, employees need to receive recognition more than once a year at their performance review. Otherwise, they view the praise as “going through the motions”. A third component of authentic appreciation is that the communication has to be about them personally – not the department, not their group, but something they did. Finally, they have to believe that you mean what you say. How you treat them has to match the words you use. If you are not sure how your team members want to be shown appreciation, the Motivating By Appreciation Inventory ( will identify the language of appreciation and specific actions preferred by each employee. You then can create a group profile for your team, so everyone knows how to encourage one another. Remember, employees want to know that they are valued for what they contribute to the success of the organization. And communicating authentic appreciation in the ways they desire it can make the difference between keeping your quality team members or having a negative work environment that everyone wants to leave. Paul White, Ph.D., is the co-author of The 5 Languages of Appreciation in the Workplace with Dr. Gary Chapman.

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